ASC 470-958

Not-for-Profit Entities

470 Debt

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In brief

IntroductoryRecognition Not-for-profit Debt and equity Presentation

This subtopic addresses how a not-for-profit entity accounts for debt, in particular conduit financing obtained through state and local financing authorities. The core rule is that because the NFP is responsible for repaying tax-exempt bonds or other obligations issued on its behalf, the NFP recognizes that financing as a liability on its statement of financial position (470-958-25-1). Scope follows the NFP Overall Subtopic scope in Section 958-10-15.

Key points (5)

This Subtopic gives debt guidance for not-for-profit entities within the scope of Topic 470 (470-958-05-1).
Scope and scope exceptions are the same as those in the Not-for-Profit Entities Overall Subtopic, Section 958-10-15 (470-958-15-1).
An NFP may finance part of its activities with proceeds of tax-exempt bonds or other obligations issued through state and local financing authorities (470-958-25-1).
Because the NFP is responsible for repayment of those obligations, the financing must be recognized as a liability in the NFP's statement of financial position (470-958-25-1).
The fact that the bonds are legally issued by a governmental financing authority does not keep the obligation off the NFP's statement of financial position.

For students. Short but testable: students often assume that because a governmental authority is the nominal issuer of tax-exempt (conduit) bonds, the NFP borrower reports nothing—wrong; repayment responsibility drives liability recognition by the NFP.

not-for-profit entity tax-exempt bond financing conduit debt obligation state and local financing authority liability recognition statement of financial position

Machine-generated study aid for ASC 470-958. Check the source paragraphs below.

470-958-00Status

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470-958-00-1

The following table identifies the changes made to this Subtopic.

Paragraph	Action	Accounting Standards Update	Date

958-470-05-1	Amended	Accounting Standards Update No. 2012-04	10/01/2012

470-958-05Overview and Background

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470-958-05-1

This Subtopic provides guidance on accounting for debt for not-for-profit entities within the scope of this Topic.

470-958-15Scope and Scope Exceptions

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Overall Guidance

470-958-15-1

This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic (see Section 958-10-15).

470-958-25Recognition

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470-958-25-1

A not-for-profit entity (NFP) may finance part of its activities from the proceeds of tax-exempt bonds or other obligations issued through state and local financing authorities. Because the NFP is responsible for the repayment of those obligations, that financing shall be recognized as a liability in its statement of financial position.